Recording and Valuing Trading Securities

Explain how to record the sale of trading securities.

1. Unruh Corp. began operations in 2007. An analysis of Unruh's equity securities portfolio acquired in 2007 shows the following totals at December 31, 2007 for trading and available-for-sale securities: Trading Available-for-Sale

#6 XYZ Company began operations in 2006. Since then, it has reported the following gains and losses for its investments in trading securities on the income statement: 2006 2007 2008 Gains (losses) from sale of trading securities $ 15,000 $(20,000) $ 14,000 Unrealized holding losses on valuation of trading se

Over the past few years, Company A has retained, on the average, 70 percent of its earnings in the business. The future retention rate is expected to remain at 70 percent of earnings, and long-run earnings growth is expected to be 10 percent. If the risk-free rate, kRF, is 8 percent, the expected return on the market, kM, is 12

Trading equity securities. Gordon Company has the following securities in its portfolio of trading equity securities on December 31, 2003: Cost Fair Value 5,000 shares of Milner Corp., Common

Bowers Investments bought 1,000 shares of IDA, Inc. common stock on Jan 1, Year 1, for $5,000 and 1,000 share of JOE, Inc. common stock on July 1, Year 1, for $6,000. IDA declared $500 in dividends, and JOE declared $600 in dividends on December 31, Year 1. At the end of Year 1, the market value of the IDA stock was $4,500 and

EXERCISE 14-41 GAIN AND LOSSES AND THE STATEMENT OF CASH FLOWS Miss Maggie Company entered into the following transactions during the year: Miss Maggie had no investment securities at the beginning of the year. The cost of the trading securities sold was $300; the cost of the available-for-sale securities sold was $150.

E17-6 (Entries for Available-for-Sale and Trading Securities) The following information is available for Barkley Company at December 31, 2007, regarding its investments. Securities Cost Fair Value 3,000 shares of Myers Corporation Common Stock $40,000 $48,000 1,000 shares of Cole Incorporated Preferred Stock 25,000 22,000

1. Sternberg argues that certain kinds of insider trading are ethical, whereas other kinds are unethical. Set forth your understanding of insider trading and whether or not you believe such trading to be ethical or unethical and why.